Media captionPro and anti-Lula campaigners held a demonstration in Congonhas airport where the ex-leader was questioned

Former Brazilian President Luiz Inacio Lula da Silva has been questioned by police and his house raided as part of a major fraud inquiry into the state oil company Petrobras.

He was released after three hours of questioning.

Lula, who left office in 2011, has denied allegations of corruption.

The long-running inquiry, known as Operation Car Wash, is probing accusations of corruption and money laundering at Petrobras.

Dozens of executives and politicians have been arrested or are under investigation on suspicion of overcharging contracts with Petrobras and using part of the money to pay for bribes and electoral campaigns.

Police said they had evidence that Lula, 70, received illicit benefits from the kickback scheme. But no charges have been brought against him so far.

Lula's institute said in a statement (in Portuguese) the "violence" against the former president was "arbitrary, illegal and unjustifiable", as he had been co-operating with the investigations.

Officials said some 33 search warrants and 11 detention warrants were carried out by 200 federal police agents in the states of Rio de Janeiro, Sao Paulo and Bahia.

Lula's house in Sao Bernardo do Campo, near Sao Paulo, was raided early on Friday. The headquarters of his institute in Sao Paulo was also targeted, as were his wife, Marisa, and sons, reports said.

What next? BBC's Daniel Gallas, in Sao Paulo

Image copyrightReuters

There is much more at stake in these investigations than just Lula's personal reputation. His legacy and the future of his political project for Brazil - which has shaped the country for the past 14 years - are also under scrutiny.

Under his Workers' Party, Brazil has seen a period of spectacular economic growth and a fall in inequality.

And now, under the same party, the country is facing its worst recession in 25 years; critics point to the government's mistakes for creating the crisis.

Lula has said he is prepared to run for president in 2018. However, in order for his political project to survive, he will have to clear his name and his party's. His detention is a major obstacle in his path.

Markets in Brazil reacted strongly to the news. The value of the Brazilian currency, the real, surged 3% in the morning. Sao Paulo's main stock exchange index rose more than 4% in the initial hours of trading.

One of the lines of inquiry is that construction companies targeted by the operation could have favoured Lula in the development of a ranch and a luxury beachfront apartment. Raids in the cities where these properties are located were also carried out.

Some of these companies have also hired Lula and his institute for speeches.

"Former president Lula, besides being party leader, was the one ultimately responsible for the decision on who would be the directors at Petrobras and was one of the main beneficiaries of these crimes," a police statement quoted by Reuters news agency said.

"There is evidence that the crimes enriched him and financed electoral campaigns and the treasury of his political group."

Operation Aletheia

$2bn

paid in alleged bribes by businessmen to obtain Petrobras contracts

33 search warrants and

11 arrest warrants, carried out by

200 police officers and

30 federal tax office auditors

Source: Federal Police

AP

'Search for the truth' - Brazilian media, from BBC Monitoring

Operation Car Wash, or Lava Jato in Portuguese, as the corruption investigation is known, has been closely monitored by Brazilian media over the past two years.

Many TV networks are providing live coverage from outside Lula's apartment, where protesters have gathered.

And articles reflecting what the detention means are starting to appear. One of the many headlines in the popular daily Folha de Sao Paulo quotes an opposition figure as saying: "Operations in Lula's house could be the beginning of the end".

Several newspapers are highlighting the nickname of this new phase of the investigation: "Aletheia" is a Greek word meaning "search for truth".

Supporters and opponents of the former president clashed in front of his house following the raids. Both sides have called protests for later on Friday.

Demonstrators also scuffled outside the police station where Lula was questioned.

Lula's Workers' Party strongly criticised the operation, and its leader described it as a "political spectacle" (in Portuguese).

But prosecutor Carlos Fernando dos Santos Lima defended it at a press conference, saying that no-one was exempt from prosecution.

A popular figure

Lula served two terms as president and was succeeded in office by his political protege, Dilma Rousseff.

He led Brazil during a time of rapid economic growth and is credited for lifting millions of people out of poverty.

Image copyrightAPImage caption
Lula was succeeded by Dilma Rousseff as Brazilian president in 2011

He still is a well-liked figure and has been considered as a potential candidate in presidential elections in 2018. But his popularity has been hit by recent allegations that he either had knowledge or involvement in the wrongdoings.

Lula's institute has repeatedly said the former president had never committed any illegal acts before, during or after his presidential term.

The corruption scandal threatens the government of Ms Rousseff, who has faced repeated impeachment calls, analysts say. She has denied having any knowledge of wrongdoings.